MEPs vote against curbs on bonuses for European fund managers
The European Parliament has today narrowly voted against capping fund managers’ bonuses at 100% of salary under the upcoming UCITS V directive.
Jon Terry, partner in PwC’s reward team, said:
“This will be viewed as a major victory for the asset management industry. The bonus cap would have left fund managers facing the toughest pay rules across the whole of the financial services sector. The vote against the cap demonstrates an acceptance from rule makers that the asset management sector operates very differently to the banking sector in terms of risk profile.
“Following the vote, the prospect of restrictions on variable pay being included in the UCITS V directive now appears to have decreased significantly. The industry should start to prepare on the basis that remuneration regulations under UCITS V are likely to closely mirror those under the AIFMD directive, which is currently being implemented by local regulators in the EU for managers of alternative investment funds, including hedge funds, private equity funds, real estate funds and investment trusts.”
“All fund management firms, including those which manage both UCITS and alternative investment funds will welcome the similar stance on variable pay from both directives. This will make implementing the pay provisions of both directives a much less onerous task. Despite the headline grabbing bonus caps being taken off the table, firms will still have to make significant changes to their remuneration policies under AIFMD and UCITS V. This includes likely changes to the design and implementation of deferral structures and fund based remuneration and firms’ governance structures and processes.”